Namkeen maker Gopal Snacks files papers with SEBI to raise ₹650 crore via IPO

Rajkot-based Gopal Snacks has filed its draft red herring prospectus (DRHP) with the capital markets regulator Securities and Exchange Board of India (SEBI) to raise funds through an initial public offering (IPO) route. The fast moving consumer goods company aims to ₹650 crore through public issue, which is entirely an offer for sale (OFS) of equity shares by promoters and other selling shareholders with no fresh issue of shares.  

The offer for sale comprises up to ₹100 crore by Bipinbhai Vithalbhai Hadvani, up to ₹540 crore by Gopal Agriproducts Private Limited (promoter selling shareholders), and up to ₹10 crore by Harsh Sureshkumar Shah (other selling shareholder).

As per the preliminary paper filed with the SEBI, the company has reserved half of the net offer for qualified institutional buyers (QIBs), up to 15% for non-institutional investors (NIIs), and remaining 35% for retail individual investors. The offer also includes a reservation for subscription by eligible employees. 

Gopal Snacks, which was founded in 1999 as Gopal Gruh Udyog by Bipin Hadvani, is the largest manufacturer of snack pellets and gathiya in terms of production volume and sales revenue as of fiscal FY23, according to F&S Report mentioned in the DRHP. The company ranks fourth largest brand in the organised sector of ethnic savouries (including gathiya) in terms of market share in India, the report notes.

Under the "Gopal" brand, the company sells an average of 8.01 million packets per day, which has a wide range of savouries products, including fast-moving consumer goods like papad, spices, gram flour or besan, noodles, rusk, and soan papdi, as well as ethnic snacks like namkeen and gathiya and western snacks like wafers, extruded snacks, and snack pellets. Its product portfolio comprises 84 products with 276 SKUs. 

As of September 30, 2023, the namkeem makers’ products were sold in 10 states and 2 union territories and have a network of 3 depots and 617 distributors. The company operates three manufacturing facilities: Rajkot and Modasa in Gujarat, and Nagpur in Maharashtra. Furthermore, it runs three ancillary manufacturing facilities that mostly produce besan, raw snack pellets, seasoning, and spices. These are mainly used internally to make finished products like namkeen, gathiya, and snack pellets. 

On the financial front, the company’s revenue from operations increased from ₹1,128.86 crore in FY21 to ₹1,394.65 crore in FY23 at a CAGR of 11.15%. The profit grew at a CAGR of 130.65% from ₹21.12 crore in FY21 to ₹112.37 crore in FY23. The EBITDA increased from ₹60.35 crore in F21 to ₹1,96.22 crore in FY23, growing at a CAGR of 80.31%. 

For six months ended September 30, 2023, revenue from operations stood at ₹676.19 crore and profit after tax at ₹55.56 crore. 

In FY22, the snack maker had the highest fixed asset turnover ratio, return on equity, and return on capital employed, among key snacks companies in India such as Bikaji Foods International Limited, Haldiram (Nagpur +Delhi), Bikanervala Foods Private Limited, Prataap Snacks Limited, Balaji Wafers Private Limited, PepsiCo India Holdings Pvt Ltd, and DFM Foods Limited, as per the document filed with the SEBI. 

The Indian market for savoury snacks including western snacks and ethnic savouries (including gathiya) was estimated to be valued at ₹79,600 crores in FY23 and is projected to grow at approximately 11% CAGR reaching ₹1,21,700 crore by FY27. Western snacks and ethnic savouries (including gathiya) were estimated to be contributing 51% and 49% of the Indian savoury snacks market, respectively. The organised market holds a market share of approximately 57% in FY23 in the Indian savoury snacks industry and is forecasted to grow at an 11.7% CAGR during FY23 to FY27, according to F&S report. 

Intensive Fiscal Services Private Limited, Axis Capital Limited, and JM Financial Limited, are the book-running lead managers, and Link Intime India Private Limited is the registrar of the offer. The equity shares are proposed to be listed on the BSE and NSE. 

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